Anadarko, Noble spend big to fight Colorado fracing limits

4/16/2014

Anadarko, Noble spend big to fight Colorado fracing limits

JENNIFER OLDHAM

DENVER, Colorado (Bloomberg) -- Anadarko Petroleum Corp. and Noble Energy Inc., Colorado’s largest oil producers, are waging a media campaign to promote the benefits of hydraulic fracturing as residents push statewide measures to restrict the drilling technique as a threat to the environment.

“It’s all eyes on Colorado,” said Jon Haubert, a spokesman for Coloradans for Responsible Energy Development, created by the energy companies to answer critics of fracing. “The oil and gas industry hasn’t done a good job of explaining fracing.”

State officials will review at least 10 oil and natural-gas measures to see if they qualify for petition drives that could put them on the November ballot. The proposals would allow communities to prohibit fracing or require more distance between wells and residences.

To blunt that, Anadarko and Noble are buying ads after their Coloradans for Responsible Energy Development spent $1 million on television time in the fourth quarter, according to New York-based Nielsen Media Research. They’ve produced six TV commercials, two special sections in the state’s largest newspaper and paid for radio ads and websites.

The fracing debate has gained momentum as drilling moved closer to homes, raising concerns about air and water contamination and even earthquakes. Ohio will require seismic monitors for fracing in some areas after a series of temblors. More than 400 communities from California to New York have passed measures against fracing, according to Food and Water Watch, a Washington-based advocacy group. That includes five in once energy-friendly Colorado, representing about one in 10 of the state’s residents.

Anadarko and Noble, which collaborated with the Environmental Defense Fund to develop groundbreaking controls on emissions from oil and natural-gas operations in Colorado, are attempting to hold back discontent with fracing by spending millions on outreach.

“This is a multi-million-dollar effort, there’s no question about that,” said John Christiansen, director of public affairs for Anadarko, based in a Houston suburb known as The Woodlands, without providing figures. “We are trying to reach people through social media too. We are encouraging them to bring their questions to us.”

Ensuring access to Colorado’s resources is just part of the worldwide strategy for the companies. Anadarko freed itself to pursue global ambitions with a $5-bn settlement of a pollution case earlier this month. Noble, a $25-bn company, is developing prospects from the Midwest to Africa.

The organization formed by Anadarko and Noble has support from some of the state’s most widely recognized figures, including former Governors Roy Romer, a Democrat, and Bill Owens, a Republican, who serve on its advisory committee.

“Since rolling out the group in the fall of 2013, we now have 72% name recognition through the most recent polling efforts,” said Ted Brown, a Denver-based senior V.P. for Noble, which has its headquarters in Houston. “It’s making a difference -- we’re getting recognized and great feedback on a subject that most folks really don’t understand.”

The energy companies also formed a political group known as an issue committee that raised $2 million through the end of March and has reserved television time close to the election, Haubert said.

Opponents are directing their efforts to amending Colorado’s constitution to give local governments the power to ban or restrict oil and gas drilling, now permitted by state law, and require more distance between wells and structures.

Language for the measures is to be presented to the Secretary of State’s office today for approval. Proponents must then collect about 86,000 signatures to put the measure on the ballot, according to the secretary’s office.

Energy operators say several proposals that would transfer regulatory control over oil and gas activities to local governments could lead, in effect, to a statewide fracing ban. Proponents say they’re seeking to give cities and counties more leeway in protecting their residents.

“I’m not anti-fracing, I’m pro-health,” said Kelly Giddens, a Fort Collins resident and a proponent of a local-control measure.

“We aren’t telling the communities they have to regulate oil and gas more than the state does,” she added. “It’s strictly about giving them the constitutional protections, as a community, to be able to regulate oil and gas as they see fit.”

A measure Giddens is promoting would specifically permit localities to enact “bans or moratoria on hydraulic fracturing.” Several proposed measures would also increase setbacks for wells up to 2,640 ft (840 m) from occupied structures. Current state regulations set the distance at 500 ft.

Haubert, speaking for the oil companies, said local governments already have a hand in the energy development process through requirements for permits and discussions about how drilling would impact roads. This is on top of stringent state regulations, he said.

“People think local and municipal governments are not involved,” he said. “We need to let people know it’s another one of those myths.”

Anadarko and Noble, through their energy development organization, argue in advertisements that the oil and natural-gas industry generated almost $30 bn for Colorado’s economy in a year, and that fracing has been used safely for more than 60 years. A six-page supplement to the Denver Post on Feb. 16, labeled “Energy & Environment,” included articles titled “Chemical-free process cleans up water from fracing,” and “Energy is a big benefit to Colorado’s bottom line.”

Anadarko and Noble undertake 80% of all operations in the Denver-Julesburg basin, a rich source of oil and gas in eastern Colorado. Anadarko operates about 5,000 wells there and said it expects to invest $2 bn in the region this year. Noble runs about 8,000 wells in the basin and plans to invest $12 bn over the next five years.

Drilling in the basin has helped propel Colorado to the nation’s sixth-largest natural-gas producer and ninth-biggest oil producer.

A March study found Colorado could lose $8 bn in gross domestic product and 68,000 jobs in the first five years if hydraulic fracturing were banned statewide. The analysis, by the Boulder-based Leeds School of Business at the University of Colorado, estimated losses in tax revenue at $567 million over the first five years if energy development were curtailed.

The industry public-relations campaign is directed at lawmakers as much as it is at residents, said Amy Mall, a senior policy analyst at the New York-based Natural Resources Defense Council, a nonprofit environmental group.

“It reminds politicians this industry has a lot of money to spend in favor of, or against, politicians,” she said. “I don’t think it’s convincing people in communities that this is a safe, clean industry.”